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Can DIY Tax Software Lead To An IRS Audit?

Understanding the short-comings of DIY tax tools


ORLANDO, Fla. - Do you remember when (even) former Treasury Secretary, Tim Geithner, testified on tax problems in his personal tax returns? Do you still remember who he blamed? Turbo Tax. Local Orlando CPA and tax expert, Gray Laney, explains.

“Using those programs can end up leaving hundreds, or even thousands of your dollars in the coffers of Uncle Sam,” Laney said. “Even if you follow all of their instructions to a tee. I see it all the time--frustrated clients bringing in their prior year’s tax return, astonished at all the “hidden money” we are able to find for them.”
“You might think they’re cheap. And on the surface, you might be right (though, in the last few years, a $1 Billion class action lawsuit was filed in the federal court in Philadelphia alleging gross misstatement of fees and deceptive standards of the federal “FreeFile” program… so even on the surface, it wasn’t always cheap). But I’m not even talking about the money for the service itself,” says Laney.

“We tax professionals often will joke about how these online software programs (referring to popular tax-filing softwares, such as TaxSlayer, TurboTax, etc.) are good for our businesses. First, they’re not nearly as “easy to use” as they say, and furthermore, they can end up costing tax payers an arm and a leg,” Laney clarified.
What’s worse… Choosing the wrong method, or forms, in filing your taxes can place you directly in the crosshairs for an audit. Even if you don’t owe a ton of back taxes, you still don’t want your record to show some IRS agent that there has been a discrepancy of some kind in the past, so that red flags begin to fly, and then more bureaucratic people start looking through all of your past tax filings and current income holdings… basically taking your social security number, and poking around in your private life.
“Just another reason this is so important… now more than ever. New government regulations in 2012 and 2013, delays in Congressional action, and issues with refund “loans” from the big chains continue to create a mess in the tax industry… and the “Big Brand Names” (you know who I’m talking about) do NOT want you to know about it. In fact, they’re doing all they can this year to hold on to their business, and trust me -- it is not good for you,” Laney added.
Yes, it can be seductive to “go it alone” ... to trust a piece of software to point out possible deductions. To trust your work to poorly-trained preparers in a big box office. To protect against your chances of audits through online chatroom support or hourly employees. But it can be a big trap. Just ask Tim Geithner.

Gray Laney, CPA co-founded Laney & Laney, P.A. in 1975 with his late father, Marion G. Laney, Sr. Laney has also been a member of the Florida Institute of CPA’s for over 36 years, and his team provides financial services to both individuals and businesses. Give him a call (407) 425-2657, email or visit his website


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